Business Economists Less Optimistic About U.S. Economy, But See More Wage Growth

Economists at U.S. companies are less optimistic about the nation’s economic growth but are upbeat about wage increases for workers, according to results of a closely watched private survey released Monday.

For the first time in three years, more than a quarter of those surveyed by the National Association for Business Economics said they expected economic growth to be 2 percent or less over the next 12 months.

Still, 70 percent of the respondents said they expected the nation’s total economic output, or gross domestic product, to expand between 2.1 percent and 3 percent, which would match the moderate annual pace of growth for most of the recovery from the Great Recession.

Analysts expect that U.S. economic growth slowed in the fourth quarter of last year to a weak 0.9 percent. The Commerce Department is scheduled to release its first official estimate of growth on Friday.

The results from the survey of business economists indicated sales growth and expectations slowing.

About 48 percent of respondents in the quarterly NABE survey said they expected sales at their companies to rise during the next three months, down from 51 percent in October.

That reflected a slowdown at the end of last year, in which just 47 percent of respondents said sales rose during the fourth quarter. About 51 percent reported rising quarterly sales in October.

The business economists were surveyed from Dec. 17 to Jan. 5, so the results don’t reflect most of the financial market turmoil at the start of the year.

Some experts worry that the stock market declines could rattle the confidence of consumers and businesses, pushing the U.S. into a recession.

But the labor market ended the year with strong growth, and the NABE survey respondents were more optimistic that wages would increase. Rising wages would fuel more consumer spending and boost the economy.

The survey’s overall wage and salary index rose sharply from October to its highest level in more than a decade. About 49 percent of respondents reported that wages and salaries at their companies rose in the fourth quarter, compared with 33 percent in the previous survey.

Expectations for wage increases in the first three months of this year jumped as well, with 58 percent of respondents saying they anticipated a boost in worker pay. That compared with 44 percent in the October survey.

The optimism on wages didn’t fully extend to hiring.

About 15 percent of respondents said they expected their firms to reduce employment this quarter — up from 10 percent in October — the largest percentage since the question was added to the survey in mid-2014.

But the percentage of those expecting their companies to increase payrolls also rose, leaving the overall employment index unchanged.